Assessing barriers to trade in services in India: An empirical investigation

Abstract

International trade in services has become more important in recent years as advances in technology have permitted new means of providing services across borders. Services have emerged as crucial economic activities in India, more prominently over the last decade. Apart from providing the bulk of employment and income in India, the services sector also serves as a vital input for producing other goods and services. While a large part of India's services sector is untapped and rarely explored by the international market, a growing number of barriers have been impeding India's international market access in the services sector. In this article, we performed a gravity analysis of the linkages between India's services trade flow and its probable barriers. The estimated results show that a 1 per cent improvement in services trade facilitation measures would lead to a 2 per cent rise in services exports in India. The paper concludes that improved trade facilitation may help unlock unrealized services trade potential, and, therefore, more effective policy toward an improved services trade infrastructure would be needed to facilitate services exports from India. © 2013-Center for Economic Integration, Sejong Institution, Sejong University, All Rights Reserved.